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Saturday, August 01, 2009

Ain't no budget ax big enough

Omaha thought it faced budgetary chaos.

Now the city finds out it's facing real budgetary chaos, not mere "economic downturn" budgetary chaos. There is a difference.

Right now, the difference is about $7 million. What was a $5 million hole remaining in the city's ledger for fiscal year 2008-09 -- and that's after city hall already had cut $9 million from the budget -- suddenly has become a $12 million chasm.

AND IF Joe Councilman and Jack Taxpayer think Omaha's going to budget-cut its way out of that kind of deficit, I'll show you a city no one's going to much want to live in anymore. The Omaha World-Herald this morning tells a tale only Arnold Schwarzenegger could love -- not:

Mayor Jim Suttle said Friday that Omaha faces an additional $7 million gap in its general fund budget this year. The new problems raise the total 2009 unresolved shortfall to $12 million.

The shortfall has grown mainly because of weak interest earnings, higher-than-expected health care payments for retirees and lower tax collections on gas and water usage, officials said.

“These latest numbers reinforce the depth of the financial crisis and point out the urgency in obtaining wage freezes from the city unions for both 2009 and 2010,” Suttle said.

Omaha has been struggling with its budget because of the weak economy, with revenues falling short of projections. Both Suttle and former Mayor Mike Fahey have scrambled to balance this year's budget, and Suttle also has proposed tax hikes and budget cuts for 2010.

So far this year, Omaha officials have cut $9 million from the budget passed last summer. Until now, they thought the goal was $14 million in cuts. Suttle had hoped to close the $5 million gap by negotiating wage freezes equaling that amount with city employee unions.

Now, even if the unions agree to those concessions, the city still faces a massive hole in its current budget.

“Ouch,” said City Council President Garry Gernandt. “It's the type of news we don't want to hear, now or ever.”

Suttle and his new finance director, Pam Spaccarotella, did not outline what additional cuts they will propose. Suttle pointed out that his proposed 2 percent entertainment tax, if implemented, would take effect Oct. 1 of this year. While the tax is mainly aimed at solving next year's budget problems, Suttle said it also would generate $2 million this year that could be applied to the current shortfall.

Councilman Chuck Sigerson was not swayed by that argument. He remains skeptical of the entertainment tax and said the latest numbers don't change his mind.

“I think we need to be very, very careful before we leap into an entertainment tax,” he said. “We need to let cooler heads prevail. I just won't be railroaded into doing it, just because of the latest emergency.”

Sigerson also said he hoped that the city would gain extra revenue later in the year. For example, he said, the federal “cash for clunkers” program is enticing more people to buy cars, which would boost sales tax revenue for the city.

Gernandt doubted whether the city would be able to start collecting the new entertainment tax by Oct. 1, even if the council did approve it. He said there would be many logistical challenges in implementing the tax.

But Gernandt also said he couldn't immediately say where the city might make enough cuts to balance the budget.

Spaccarotella said the latest projections for the shortfall are based on actual spending for the first half of the year. Earlier estimates were calculated from spending and revenues during the first three months.

YIKES! One way or another, this is going to hurt.

I wish I thought Suttle -- or the city council, for that matter -- was up to the job.

Suttle this week has proved he's big on "listening tours" as a way of involving the public in city government. Personally, I think that's all hat and no horse, but that's not important now.

What's important now is realizing that this isn't a generation or two ago, and that the main thing the "public" is interested in is Numero Uno. Cynic that I am, I think people would rather see the city go down in flames than raise property taxes . . . so long as it's not their corner of the city getting torched.

No, that's not exactly right. I think that most people who call their council member or show up to these public meetings would rather see the whole city go down in flames than pay higher property taxes. And politicians, being the craven weenies they usually are, would rather be safe than voted out of office.

Of course, if the Founding Fathers had counted on that kind of lowest common denominator government, they would have given us a direct democracy and not a republic. But they lived a long time ago -- "duty" was still in the dictionary then.

Assuming for a moment that "duty" still were in the dictionary, I think politicians would figure it was their lot in life to govern during "interesting" times, and that lot in life included sucking it up and risking the wrath of the self-interested masses. After all, "the common good" never has been an easy sell.

IN A "DUTY-BASED" system, I think the Democrat mayor would recognize he led a small-"R" republican local government . . . and figure most folks don't even get one term to run a city of 435,000. Likewise, you'd see council members telling voters "You'll thank me later."

Even if later was after they'd been tossed out of office.

What's worse, getting the boot for keeping your city alive as a going concern, or continuing to preside over a smoking hulk of what used to be a pretty nice place to live?

The plain fact is the city of Omaha can't cut itself out of this financial pickle without doing severe and permanent damage to itself. The plain fact is that if people can't afford to pay an extra $30, $50 or $150 a year on their $130,000 home, they've got bigger financial problems than a rising tax bill . . . and can't afford to be living in a house that expensive.

The plain fact is taxpayers need to be told to suck it up in the name of the common good. The plain fact is city employees need to be told they have two options: Accept a pay freeze for the next two years or the layoffs begin tomorrow.

Lots of people in the private sector already have faced pay freezes, pay cuts, furloughs and layoffs. When the city has no bread, a city job doesn't mean you get to say "Let them eat cake."